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The rupee recovered from intraday low of 74.23 after RBI Governor Urjit Patel reiterated that the domestic currency is still better than its emerging market peers and that the apex bank does not have a target for it.
Admitting that the country has not been immune to global spillovers from external factors, Patel said, “The rupee fall, in some respect, is moderate in comparison to several other emerging market market peers.”
Ruling out a target for the currency, he said, “Our response to these unsettled conditions has been to ensure that foreign exchange market remains liquid with no undue volatility. There is no target or band around any particular level of exchange rate, which is determined by market forces demand and supply.”
The rupee crashed below the 74-level against the US dollar for the first time ever after the Reserve Bank kept its key policy rate unchanged. The domestic currency turned weak by 65 paise to 74.23 against the dollar soon after the RBI announced its monetary policy.
The rupee sentiment was hit as investors remained concerned over sustained foreign capital outflows and fears of widening current account deficit in the wake of soaring crude oil prices.
The rupee opened a tad strong at 73.56 a dollar against its previous record low closing of 73.58. It hovered in a range of 74.23 and 73.42 before ending the session down by 18 paise at 73.76 at 5 pm local time.
The Reserve Bank of India, in its fourth bi-monthly policy statement, has left the repo rate unchanged at 6.5 per cent. Consequently, the reverse repo rate under the LAF remains at 6.25 per cent, and the marginal standing facility rate and the Bank Rate at 6.75 per cent.
The dollar edged toward a 10-week high before monthly US jobs data that investors hope will shed light on how much longer the Fed's aggressive rate-hiking cycle will continue.
The dollar index, which measures its performance against a basket of six currencies, was 0.1 per cent higher on the day at 95.804.
The Sensex tanked 792.17 points or 2.25 per cent to close at a near 6-month low of 34,376.99, while the Nifty slumped 282.80 points or 2.67 per cent to 10,316.45.
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